How to restore public confidence after the Gourock-Dunoon ferry shambles

The Herald Letters November 22 2006

I MUST correct George Lyon, MSP (November 21), regarding his defence of the Scottish Executive's failed tendering of the CalMac Gourock-Dunoon ferry service. He says: "The real reason why the service to Dunoon is under threat is owing to the then Tory Transport Minister, John McGregor, in 1992 successfully driving through an agreement in Brussels to introduce the Cabotage Directive, requiring every country in the EU to put their ferry routes out to tender."
First, Mr Lyon appears to be referring to the 1992 Maritime Cabotage Regulation (not a Cabotage Directive - that is a different legal instrument with different implications).
Secondly, the 1992 Maritime Cabotage Regulation was only one of a catalogue of complementary sector-specific regulations adopted by the commission over several years, all with the objective of enhancing competition and dealing with market-distorting state aid. It was inevitable that the 1992 regulation, or something like it, would be imposed on this sector, and futile and misleading to blame any individual political party. Whoever was in power would have had to accept the 1992 regulation or leave the EC. And that might not be a solution: Norway adheres to a variant of the 1992 regulation through EU economic co-operation agreements.
Thirdly, contrary to what Mr Lyon says, the Maritime Cabotage Regulation did not require every country in the EU to put their ferry routes out to tender. Indeed, following the Altmark case a credible case could be made that the EC laws in this area could be satisfied without the need to tender. I put just such a case to the transport committee of the Scottish Parliament and my case was referred to and discussed as a possible alternative to tendering when the executive proposal to tender CalMac was brought back to the parliament in September last year.
Unfortunately, in the debate Mr Lyon claimed that I had "admitted on many occasions" that the alternative approach I recommended "would end the CalMac network, individualise the routes and leave the routes open to cherry-picking".
I wrote after the debate to the minister and all members of the transport committee stating that that simply was not, and never had been, a fair or true representation of my views. At the very least it was a serious misunderstanding of my position. But it was too late to influence the debate - by that time the vote to tender had been taken.
Fourthly, on the Gourock-Dunoon tender, Mr Lyon states: "The executive agreed to tender the route on a commercial basis as recommended in both Deloitte Touche and Professor Neil Kay's reports." In fact, neither report recommended a tender, certainly not the futile and shambolic exercise that the executive has indulged in on this route.
The executive told firms they would have to compete with no subsidy but at the same time face a time-limited tender hedged in with a mish-mash of unnecessary restrictions and vague specifications that were not going to be imposed on Western Ferries, the other company in the market. Even if the bidders sank resources into building market share back up, after six years they would face the risk of losing the re-tender to another firm.
Then there was the discovery in the middle of all this that the executive had been having private meetings and correspondence with Western
Ferries on its becoming monopoly operator of vehicle-carrying on the route; this continued even after the decision to seek an unsubsidised commercial operator had been announced in parliament.
So it is perhaps understandable that confidence collapsed in the tendering process. The OFT is being pressed to open an investigation into what has gone on here. Such an investigation may be the only way that public confidence can be restored to what has been fairly described as a shambles and a farce.
Professor Neil Kay,